1. Chapter 11 Reorganization

On June 13, 2009, Six Flags, Inc. ("SFI"), Six Flags Operations Inc. ("SFO") and Six Flags Theme Parks Inc. ("SFTP") and certain of SFTP's domestic subsidiaries (the "SFTP Subsidiaries" and, collectively with SFI, SFO and SFTP, the "Debtors") filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") (Case No. 09-12019) (the "Chapter 11 Filing"). SFI's subsidiaries that own interests in Six Flags Over Texas ("SFOT") and Six Flags Over Georgia (including Six Flags White Water Atlanta) ("SFOG" and together with SFOT, the "Partnership Parks") and the parks in Canada and Mexico were not debtors in the Chapter 11 Filing.

(a) Plan of Reorganization

On April 30, 2010 (the "Effective Date"), the Bankruptcy Court entered an order confirming the Debtors' Modified Fourth Amended Joint Plan of Reorganization (the "Plan") and the Debtors emerged from Chapter 11 by consummating their restructuring through a series of transactions contemplated by the Plan including the following:

•

Name Change. On the Effective Date, but after the Plan became effective and prior to the distribution of securities under the Plan, SFI changed its corporate name to Six Flags Entertainment Corporation. As used herein, unless the context requires otherwise, the terms "we," "our," and "Six Flags" refer collectively to Six Flags Entertainment Corporation and its consolidated subsidiaries, and "Holdings" refers only to Six Flags Entertainment Corporation, without regard to the respective subsidiaries. As used herein, "SFI" means Six Flags, Inc. as a Debtor or prior to its name change to Six Flags Entertainment Corporation. As used herein, the "Company" refers collectively to SFI or Holdings, as the case may be, and its consolidating subsidiaries.

•

Common Stock. Pursuant to the Plan, all of SFI's common stock, preferred stock purchase rights, preferred income equity redeemable shares ("PIERS") and any other ownership interest in SFI including all options, warrants or rights, contractual or otherwise (including, but not limited to, stockholders agreements, registration rights agreements and rights agreements) were cancelled as of the Effective Date.
- On the Effective Date, Holdings issued an aggregate of 54,777,778 shares of common stock at $0.025 par value as follows: (i) 5,203,888 shares of common stock to the holders of unsecured claims against SFI, (ii) 4,724,618 shares of common stock to certain holders of the 12¹/4% Notes due 2016 (the "2016 Notes") in exchange for such 2016 Notes in the aggregate amount of $69.5 million, (iii) 34,363,950 shares of common stock to certain "accredited investors" that held unsecured claims who participated in a $505.5 million rights offering, (iv) 6,798,012 shares of common stock in an offering to certain purchasers for an aggregate purchase price of $75.0 million, (v) 3,399,006 shares of common stock in an offering to certain purchasers for an aggregate purchase price of $50.0 million and (vi) 288,304 shares of common stock were issued to certain other equity purchasers as consideration for their commitment to purchase an additional $25.0 million of common stock on or before June 1, 2011, following approval by a majority of the members of Holdings' Board of Directors (the "Delayed Draw Equity Purchase"). On June 1, 2011, the Delayed Draw Equity Purchase option expired. These share amounts have been retroactively adjusted to reflect the June 2011 two-for-one stock split as described in Note 12.
  
  On June 21, 2010, the common stock commenced trading on the New York Stock Exchange under the symbol "SIX."
•

Prepetition Indebtedness. Pursuant to the Plan and on the Effective Date, all outstanding obligations under notes issued by SFI and SFO (collectively, the "Prepetition Notes") were cancelled and the indentures governing such obligations were cancelled, except to the extent to allow the Debtors, Reorganized Debtors (as such term is defined in the Plan) or the relevant Prepetition Notes indenture trustee, as applicable, to make distributions pursuant to the Plan on account of claims related to such Prepetition Notes. The Prepetition Notes were as follows: (i) SFI's 8⁷/8% Senior Notes due 2010 (the "2010 Notes"), (ii) SFI's 9³/4% Senior Notes due 2013 (the "2013 Notes"), (iii) SFI's 9⁵/8% Senior Notes due 2014 (the "2014 Notes"), (iv) SFI's 4.50% Convertible Senior Notes due 2015 (the "2015 Notes"), and (v) the 2016 Notes.
- Pursuant to the Plan and on the Effective Date, the Second Amended and Restated Credit Agreement, dated as of May 25, 2007 (as amended, modified or otherwise supplemented from time to time, the "Prepetition Credit Agreement"), among SFI, SFO, SFTP (as the primary borrower), certain of SFTP's foreign subsidiaries party thereto, the lenders thereto, the agent banks party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (in such capacity, the "Administrative Agent"), was cancelled (except that the Prepetition Credit Agreement continued in effect solely for the purposes of allowing creditors under the Prepetition Credit Agreement to receive distributions under the Plan and allowing the Administrative Agent to exercise certain rights).
•

Financing at Emergence. On the Effective Date, we entered into two exit financing facilities: (i) an $890.0 million senior secured first lien credit facility comprised of a $120.0 million revolving loan facility, which could have been increased up to $150.0 million in certain circumstances, and a $770.0 million term loan facility (the "Exit First Lien Term Loan") and (ii) a $250.0 million senior secured second lien term loan facility (the "Exit Second Lien Facility" and, together with the Exit First Lien Facility, the "Exit Facilities").
- Also on the Effective Date, SFOG Acquisition A, Inc., SFOG Acquisition B, L.L.C., SFOT Acquisition I, Inc. and SFOT Acquisition II, Inc. (collectively, the "TW Borrowers") entered into a credit agreement with TW-SF, LLC comprised of a $150.0 million multi-draw term loan facility (the "TW Loan") for use with respect to the Partnership Parks "put" obligations.
  
  See Note 8 for a discussion of the terms and conditions of these facilities and subsequent amendments, early repayments, and terminations from debt extinguishment transactions.
•

Fresh Start Accounting. As required by accounting principles generally accepted in the United States ("GAAP"), we adopted fresh start accounting effective May 1, 2010 following the guidance of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 852, Reorganizations ("FASB ASC 852"). The financial statements for the periods ended prior to April 30, 2010 do not include the effect of any changes in our capital structure or changes in the fair value of assets and liabilities as a result of fresh start accounting. The implementation of the Plan and the application of fresh start accounting results in financial statements that are not comparable to financial statements in periods prior to emergence. See Note 1(b) for a detailed explanation of the impact of emerging from Chapter 11 and applying fresh start accounting on our financial position.
- As used herein, "Successor" refers to the Company as of the Effective Date and "Predecessor" refers to SFI together with its consolidated subsidiaries prior to the Effective Date.
(b) Fresh Start Accounting and the Effects of the Plan

Fresh start accounting results in a new basis of accounting and reflects the allocation of the Company's estimated fair value to its underlying assets and liabilities. The Company's estimates of fair value are inherently subject to significant uncertainties and contingencies beyond the Company's reasonable control. Accordingly, there can be no assurance that the estimates, assumptions, valuations, appraisals and financial projections will be realized, and actual results could vary materially. The implementation of the Plan and the application of fresh start accounting results in financial statements that are not comparable to financial statements in periods prior to emergence.

Fresh start accounting provides, among other things, for a determination of the value to be assigned to the equity of the emerging company as of a date selected for financial reporting purposes, which for the Company is April 30, 2010, the date that the Debtors emerged from Chapter 11. The Plan required the contribution of equity from the creditors representing the unsecured senior noteholders of SFI, of which $555.5 million was raised at a price of $14.71 per share, as adjusted to reflect the June 2011 two-for-one stock split described in Note 12. Holdings also issued stock at $14.71 per share to pay $146.1 million of SFO and SFI claims. The Company's reorganization value reflected the fair value of the new equity and the new debt, the conditions of which were determined after extensive arms-length negotiations between the Debtors' creditors, which included the input of several independent valuation experts representing different creditor interests, who used discounted cash flow, comparable company and precedent transaction analyses.

The analysis supporting the final reorganization value was based upon expected future cash flows of the business after emergence from Chapter 11, discounted at a rate of 11.5% and assuming a perpetuity growth rate of 3.0%. The reorganization value and the equity value are highly dependent on the achievement of the future financial results contemplated in the projections that were set forth in the Plan. The estimates and assumptions made in the valuation are inherently subject to significant uncertainties. The primary assumptions for which there is a reasonable possibility of the occurrence of a variation that would have significantly affected the reorganization value include the assumptions regarding revenue growth, operating expense growth rates, the amount and timing of capital expenditures and the discount rate utilized.

The four-column consolidated statement of financial position as of April 30, 2010 (see below) reflects the implementation of the Plan. Reorganization adjustments have been recorded within the condensed consolidated balance sheets as of April 30, 2010 to reflect effects of the Plan, including discharge of liabilities subject to compromise and the adoption of fresh start accounting in accordance with FASB ASC 852. The reorganization value of the Company of approximately $2.3 billion was based on the equity value of equity raised plus new indebtedness and fair value of Partnership Parks "put" obligations as follows (in thousands):


Equity value based on equity raised(1)	$	805,791
Add: Redeemable noncontrolling interests(2)		446,449
Add: Exit First Lien Facility		770,000
Add: Exit Second Lien Facility		250,000
Add: Other debt(3)		35,360
Add: Noncontrolling interests		5,219
Less: Net discounts on Exit Facilities		(11,450	)

Total emergence enterprise value	$	2,301,369

(1): Equity balance is calculated based on 54,777,778 shares of Holdings common stock at the price of $14.71 per share pursuant to the Plan, as adjusted to reflect the June 2011 two-for-one stock split described in Note 12.
(2): Redeemable noncontrolling interests are stated at fair value determined using the discounted cash flow methodology. The valuation was performed based on multiple scenarios with a certain number of "put" obligations assumed to be put each year. The analysis used a 9.8% rate of return adjusted for annual inflation for the annual guaranteed minimum distributions to the holders of the "put" rights and a discount rate of 7%.
(3): Other debt includes a $33.0 million refinance loan (the "Refinance Loan") for HWP Development, LLC, $32.2 million of which was outstanding as of April 30, 2010, as well as capitalized leases of approximately $2.1 million and short-term bank borrowings of $1.0 million. See Note 8 for a discussion of the terms and conditions of the Refinance Loan.

Under fresh start accounting, the total Company value is adjusted to reorganization value and is allocated to our assets and liabilities based on their respective fair values in conformity with the purchase method of accounting for business combinations in FASB ASC Topic 805, Business Combination ("FASB ASC 805"). The excess of reorganization value over the fair value of tangible and identifiable intangible assets and liabilities is recorded as goodwill. Liabilities existing as of the Effective Date, other than deferred taxes, were recorded at the present value of amounts expected to be paid using appropriate risk adjusted interest rates. Deferred taxes were determined in conformity with applicable income tax accounting standards. Predecessor accumulated depreciation, accumulated amortization, retained deficit, common stock and accumulated other comprehensive loss were eliminated.

The valuations required to determine the fair value of the Company's assets as presented below represent the results of valuation procedures performed by independent valuation specialists. The estimates of fair values of assets and liabilities have been reflected in the Successor Company consolidated balance sheet as of April 30, 2010.

The adjustments below are to our April 30, 2010 balance sheet. The balance sheet reorganization adjustments presented below summarize the impact of the Plan and the adoption of fresh start accounting as of the Effective Date.

CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)

	April 30, 2010

	Predecessor		Reorganization Adjustments(1)			Fresh Start Adjustments(2)			Successor
ASSETS
Current assets:
Cash and cash equivalents	$	75,836	$	(21,326	)	$	—		$	54,510
Accounts receivable		36,288		—			4,876			41,164
Inventories		37,811		—			(193	)		37,618
Prepaid expenses and other current assets		49,671		(9,750	)		(456	)		39,465
Assets held for sale		681		—			—			681

Total current assets		200,287		(31,076	)		4,227			173,438
Other assets:
Debt issuance costs		11,817		28,184			—			40,001
Restricted-use investment securities		2,753		—			—			2,753
Deposits and other assets		97,677		—			6,643			104,320

Total other assets		112,247		28,184			6,643			147,074
Property and equipment, at cost, net		1,507,677		—			(78,304	)		1,429,373
Assets held for sale		6,978		—			—			6,978
Intangible assets, net of accumulated amortization(3)		10,164		—			412,591			422,755
Goodwill(4)		1,051,089		—			(420,841	)		630,248

Total assets	$	2,888,442	$	(2,892	)	$	(75,684	)	$	2,809,866

	April 30, 2010

	Predecessor			Reorganization Adjustments(1)			Fresh Start Adjustments(2)			Successor
LIABILITIES and EQUITY (DEFICIT)
Liabilities not subject to compromise:
Current liabilities:
Accounts payable	$	92,198		$	(20,272	)	$	—		$	71,926
Accrued compensation, payroll taxes and benefits		15,019			1,442			—			16,461
Accrued insurance reserves		16,492			19,074			(5,118	)		30,448
Accrued interest payable		26,839			(26,630	)		—			209
Other accrued liabilities		52,753			2,883			1,438			57,074
Deferred income		61,033			—			(1,324	)		59,709
Liabilities from discontinued operations		5,409			—			—			5,409
Current portion of long-term debt		352,623			(317,946	)		—			34,677

Total current liabilities not subject to compromise		622,366			(341,449	)		(5,004	)		275,913
Long-term debt		818,808			190,425			—			1,009,233
Other long-term liabilities		46,868			—			(9,383	)		37,485
Deferred income taxes		118,821			—			110,955			229,776

Total liabilities not subject to compromise		1,606,863			(151,024	)		96,568			1,552,407
Liabilities subject to compromise		1,745,175			(1,745,175	)		—			—

Total liabilities		3,352,038			(1,896,199	)		96,568			1,552,407
Redeemable noncontrolling interests		355,933			—			90,516			446,449
Stockholders' equity (deficit):
Preferred stock, $1.00 par value		—			—			—			—
New common stock		—			685			—			685
Old common stock		2,458			(2,458	)		—			—
Capital in excess of par value		1,508,155			(703,049	)		—			805,106
Accumulated deficit		(2,308,699	)		2,598,129			(289,430	)		—
Accumulated other comprehensive loss		(26,535	)		—			26,535			—

Total stockholders' (deficit) equity		(824,621	)		1,893,307			(262,895	)		805,791
Noncontrolling interests		5,092			—			127			5,219

Total (deficit) equity		(819,529	)		1,893,307			(262,768	)		811,010

Total liabilities and equity (deficit)	$	2,888,442		$	(2,892	)	$	(75,684	)	$	2,809,866

(1): Represents amounts recorded on the Effective Date for the implementation of the Plan, including the settlement of liabilities subject to compromise and related payments, the incurrence of new indebtedness under the Exit Facilities and repayment of the Prepetition Credit Agreement and Prepetition Notes, distributions of cash and Holdings common stock and the cancellation of SFI common stock.

The Plan's impact resulted in a net decrease of $21.3 million in cash and cash equivalents. The significant sources and uses of cash were as follows (in thousands):


Sources:
Net amount borrowed under the Exit First Lien Term Loan	$	762,300
Net amount borrowed under the Exit Second Lien Loan Facility		246,250
Proceeds from the Equity Offering		630,500

Total sources		1,639,050

Uses:
Repayments of amounts owed:
Prepetition Credit Agreement—long term portion of term loan		818,125
2016 Notes		330,500
Prepetition Credit Agreement—revolving portion		270,269
Prepetition TW Promissory Note		30,677
Prepetition interest rate hedging derivatives		19,992
Prepetition Credit Agreement—current portion of term loan		17,000
Payments:
Exit Facilities' debt issuance costs		29,700
Accrued interest		96,950
Professional fees and other accrued liabilities		47,163

Total uses		1,660,376

Net cash uses	$	(21,326	)

The gain on the cancellation of liabilities subject to compromise, before income taxes, was calculated as follows:


Extinguishment of the 2010 Notes, 2013 Notes, 2014 Notes and 2015 Notes (collectively, the "SFI Senior Notes")	$	868,305
Extinguishment of the PIERS		306,650
Write-off of the accrued interest on the SFI Senior Notes		29,868
Write-off debt issuance costs on the Prepetition Credit Agreement and the Prepetition TW Promissory Note		(11,516	)
Issuance of Holdings' common stock		(105,791	)

Gain on the cancellation of liabilities subject to compromise, before income taxes	$	1,087,516

(2): Reflects the adjustments to assets and liabilities to estimated fair value, or other measurements specified by FASB ASC 805, in conjunction with the adoption of fresh start accounting. Significant adjustments are summarized as follows and all are considered a Level 3 fair value measurement with the exception of the land values which are Level 2 fair value measurements.

•

Deposits and other assets—note receivable—An adjustment of approximately $7.4 million was recorded to the book value of a note receivable to its $8.4 million estimated fair value, which was determined based on the discounted cash flow method over the life of the note.

•

Deposits and other assets—investment in nonconsolidated joint venture—This account was adjusted to its estimated fair values based on customary valuation methodologies, including comparable earnings multiples, discounted cash flows and negotiated transaction values.

•

Property and equipment, at cost—An adjustment of approximately $78.3 million was recorded to adjust the net book value of property, plant and equipment to fair value based on the new replacement cost less depreciation valuation methodology. Key assumptions used in the valuation of the Company's property, plant and equipment were based on a combination of the cost or market approach adjusted for economic obsolescence where appropriate. The land value was obtained using a sales comparison approach.

•

General liability and workers compensation—An adjustment of approximately $5.1 million was recorded to adjust the value of the general liability and workers compensation accruals for future receipts from deposits and payments for claims discounted at the weighted average debt rate upon emergence from Chapter 11 of 7%.

•

Deferred revenue—An adjustment of approximately $1.3 million was recorded to adjust the book value of deferred revenue attributable to season pass and other advance ticket sales to the fair value using appropriate profit margins and cost of service associated with related guest visitation.

•

Pension—This adjustment primarily reflects differences in assumptions, such as the expected return on plan assets and the weighted average discount rate related to the payment of benefit obligations, between the prior measurement date of March 31, 2010 and the Effective Date. For additional information on the Company's pension, see Note 14.

•

Redeemable noncontrolling interests—These are stated at fair value determined using the discounted cash flow methodology. The valuation was performed based on multiple scenarios with certain number of "puts" assumed to be put each year. The analysis used a 9.8% rate of return adjusted for annual inflation for the annual guaranteed minimum distributions to the holders of the put rights and a discount rate of 7%.

The Predecessor Company recognized a loss of $178.5 million, before income taxes, related to the fresh start accounting adjustments as follows (in thousands):

	Loss on fresh start accounting adjustments

Establishment of Holdings' goodwill	$	630,248
Elimination of SFI's goodwill		(1,051,089	)
Establishment of Holdings' intangible assets		421,510
Elimination of SFI's intangible assets		(8,919	)
Fair value adjustments:
Notes receivable		7,389
Dick Clark Productions		7,400
Deposit		(8,146	)
Property and equipment		(78,304	)
Deferred income		1,324
Accrued insurance reserves		5,118
Redeemable noncontrolling interests		(90,516	)
Other, net		(14,490	)

	$	(178,475	)

(3)

The following represent the methodologies and significant assumptions used in determining the fair value of the significant intangible assets, other than goodwill and all are considered a Level 3 fair value measurement.

Certain long-lived intangible assets which include trade names, trademarks and licensing agreements were valued using a relief from royalty methodology. Group-sales customer relationships were valued using a multi-period excess earnings method. Sponsorship agreements were valued using the lost profits method. Certain intangible assets are subject to sensitive business factors of which only a portion are within control of the Company's management. A summary of the key inputs used in the valuation of these assets are as follows:

•: The Company valued trade names, trademarks and its third party licensing rights using the income approach, specifically the relief from royalty method. Under this method, the asset values were determined by estimating the hypothetical royalties that would have to be paid if the trade name was not owned or the third-party rights not currently licensed. Royalty rates were selected based on consideration of several factors, including industry practices, the existence of licensing agreements, and importance of the trademark, trade name and licensed rights and profit levels, among other considerations. The royalty rate of 4% of expected adjusted net sales related to the respective trade names and trademarks was used in the determination of their fair values, and a rate of 1.5% was used for the third-party license agreement. The expected net sales were adjusted for certain international revenues, retail, licensing and management fees, as well as certain direct costs related to the licensing agreement. The Company anticipates using the majority of the trade names and trademarks for an indefinite period, while the license agreement intangible asset will be amortized through 2020. Income taxes were estimated at a rate of 39.5% and amounts were discounted using a 12% discount rate for trade names and trademarks and 15% for the third-party license agreement. Trade name and trademarks were valued at approximately $344 million and the third-party license agreement at approximately $24 million.
•: Sponsorship agreements were valued using the lost profits method, also referred to as "with or without" method. Under this method, the fair value of the sponsorship agreements was estimated by assessing the loss of economic profits under a hypothetical condition where such agreements would not be in place and would need to be recreated. The projected revenues, expenses and cash flows were calculated under each scenario and the difference in the annual cash flows was then discounted to the present value to derive at an indication of the value of the sponsorship agreements. Income taxes were estimated at a rate of 39.5% and amounts were discounted using a 12% discount rate, resulting in approximately $43 million of value allocated to sponsorship agreements.
•: The Company valued group sales customer relationships using the income approach, specifically the multi-period excess earnings method. In determining the fair value of the group-sales customer relationships, the multi-period excess earnings approach values the intangible asset at the present value of the incremental after-tax cash flows attributable only to the customer relationship after deducting contributory asset charges. The incremental after-tax cash flows attributable to the subject intangible asset are then discounted to their present value. Only expected sales from current group sales customers were used which was calculated based on a two year life. The Company assumed a retention rate of 50% which was supported by historical retention rates. Income taxes were estimated at a rate 39.5% and amounts were discounted using a 12% discount rate. The group-sales customer relationships were valued at approximately $7 million under this approach.

(4)

Fresh start accounting eliminated the balance of goodwill and other unamortized intangible assets of the Predecessor Company and records Successor Company intangible assets, including reorganization value in excess of amounts allocated to identified tangible and intangible assets, also referred to as Successor Company goodwill. The Successor Company's April 30, 2010 consolidated balance sheet reflects the allocation of the business enterprise value to assets and liabilities immediately following emergence as follows (in thousands):


Enterprise value	$	2,301,369
Add: Fair value of non-interest bearing liabilities (non-debt liabilities)		508,497
Less: Fair value of tangible assets		(1,756,863	)
Less: Fair value of identified intangible assets		(422,755	)

Reorganization value of assets in excess of amounts allocated to identified tangible and intangible assets (Successor Company goodwill)	$	630,248